Living under the shadow of serious debt is not what most people want, but it is a reality faced by many. Debt has become such a prevalent problem that some people believe that living with persistent debt is the only course of action. That is not true, by understanding one’s finances, setting up goals and a debt repayment plan, serious debt can be eliminated.
The Miami debt defense attorneys at Graham Legal have assisted many South Florida debtors fight against creditor harassment while they the debtor addresses their debt – below, we describe three steps to start paying off debt.
1. Cut Expenses
Debtors should first track their monthly expenses and spending habits to understand how much extra money they can throw towards their debt each month. By keeping a personal spending journal, the debtor can also figure out where to cut expenses and create a solid budget plan. Dial down on unessential spending like dining out and other entertainment costs, but also look for less obvious recurring costs (i.e. mobile phone plans and other subscriptions services) that are decreasing funds that can be used toward paying debts.
2. Create Debt Repayment Plan
The crucial step – debtors must create an actionable debt repayment plan. This plan should be defined by specific goals and, if possible, establish a reasonable timeline. Drafting such a plan takes certain steps.
1. List all debts with corresponding balances, interest rates, and minimum payments.
2. Rank debts based on the order they will be paid off. To spend less on interest and pay debts more quickly, pay off the debt with the highest interest rate first.
3. Pay off debts one at a time. While paying off the principal of the first debt, only make the minimum payments for the other debts.
3. Generate Extra Cash
After creating a budget and debt repayment plan, debtors should look for ways to increase the amount of extra cash they can put towards eliminating their debt. Consider working overtime, asking for a raise, getting a side gig or part-time job, or selling personal items of little use or of high value. Other methods would be to seek loan forgiveness (i.e. federal student loan forgiveness programs) and negotiate for lower interest rates (i.e. negotiate with creditor card issuers).
The belief that persistent debt should be accepted as a normal part of life is wrong. Most South Florida debtors can always take steps to start paying off debt. If done right, they could become debt-free. If you or a loved one is going through financial hardship and being harassed by creditors, call the Miami debt defense attorneys at Graham Legal today. We’ll defend your consumer rights and help you formulate an effective debt management plan, pointing you toward a life free of debt.